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spot rate on 1yr bond- 6% spot rate on 2yr bond- 8% liq premium for yr...

spot rate on 1yr bond- 6%
spot rate on 2yr bond- 8%
liq premium for yr 2- 0 .5%

what is the expected one year rate, one year from today
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Answer #1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

I HOPE, LIQUIDITY PREMIUM =0.5%

EXPECTED ONE YEAR RATE, ONE YEAR FROM TODAY = E(2R1) = 9.54% (ROUNDED TO 2 DECIMALS)Alle 9 w ? v . 1 ENG 04:50 12-02-2020 14 EH664 EF I EG EH EI EI EK EL EM EN EO EP 647 651 1R1 = 6.00% 1R2 = 8.00% 648 L2= 0.5

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